Hollywood film studios won a landmark UK high court ruling on Thursday forcing BT to block access to an illegal file-sharing website accused of operating "on a grand scale".

The Motion Picture Association, the trade body whose members include Warner Bros, Fox, Disney and Paramount Pictures, has been granted an order requiring BT — the UK's biggest internet service provider — to block its customers' access to the website Newzbin2.

Thursday's verdict will be viewed by the creative industries as a landmark that could set a precedent for the widespread blocking of illegal filesharing websites by ISPs, helping to stem the flow of digital piracy in the UK.

"In my judgment it follows that BT has actual knowledge of other persons using its service to infringe copyright: it knows that the users and operators of Newzbin2 infringe copyright on a large scale, and in particular infringe the copyrights of the studios in large numbers of their films and television programmes," said Justice Arnold in his ruling at the high court in London.

"[BT] knows that the users of Newzbin2 include BT subscribers, and it knows those users use its service to receive infringing copies of copyright works made available to them by Newzbin2," Arnold added.

BT had argued that forcing it to ban its 6 million UK customers from accessing a website would usher in a new wave of online censorship.

However, the creative industries claim website blocking could save them hundreds of millions of pounds in illegal downloads.

The MPA said that Newzbin2 makes unlawful copies of television programmes and films, and receives in excess of £1m a year from its 700,000 users.

"This ruling from Justice Arnold is a victory for millions of people working in the UK creative industries and demonstrates that the law of the land must apply online," said Chris Marcich, MPA managing director for Europe, the Middle East and Africa. "This court action was never an attack on ISPs, but we do need their cooperation to deal with the Newzbin site, which continually tries to evade the law and judicial sanction."

The film industry's fight to block Newzbin stretches back to March last year, when the high court ordered the site to take down all of its pirated material and pay damages to the studios.

The three men behind Newzbin Ltd – Chris Elsworth, Thomas Hurst and Lee Skillen – sold all of their shares in the company to David Harris shortly before the trial. Newzbin Ltd went into administration soon after the ruling and avoided the huge payouts.

Months later a clone site appeared operating anonymously from Sweden. Rights holders said they had no choice but to force BT to block UK users' access to the website, saying all other legal avenues had been exhausted.

Simon Milner, director of group industry policy at BT, said the latest judgment means rights holders will now have to prove in court that a website infringes copyright before it is blocked.

Milner added that the judgment puts the Digital Economy Act voluntary blocking scheme, drawn up at industry roundtable meetings earlier this year with Ed Vaizey, the culture minister, in an uncertain position.

"[The judgment] is actually helpful and we welcome it because it clarifies a complex area of law and shows that rights holders can use the copyright laws in this country. It means they have to prove a site is infringing before [a] court and get a court order," he said.

Milner did not reveal how much it will cost ISPs such as BT to block infringing websites.

Other internet providers, including TalkTalk and Virgin Media, declined to join BT's battle against the film studios, the court was told in June.

Speaking after Thursday's judgment, a spokeswoman for TalkTalk said the ruling had "no direct or immediate" impact on the ISP, the second largest in the UK, but that it would consider any similar court orders brought by film studios against it.

The Internet Service Providers' association, which represents Britain's ISPs, said: "Concerns about over-blocking, ease of circumvention and increased encryption are widely recognised which means that blocking is not a silver bullet to stop online copyright infringement."